An Embarrassment of Riches:
the Inside Story of the World’s Biggest Con
January, 2003
Razor Magazine
By Russ Baker
When Shahla Ghasemi, a resident of Tampa,
Florida, got a phone call about an inheritance coming to her and
her husband from someone who had died in Nigeria, she almost
laughed. She didn’t know anyone in Nigeria. Truth be told, she had
no idea where Nigeria was. But the man on the phone was so
persuasive that Mrs. Ghasemi and her husband Ali-Reza, a medical
doctor, put their heads together and came up with a possible
explanation . Perhaps one of Dr. Ghasemi’s former partners from an
import-export venture, who like the Ghasemis fled Iran’s
fundamentalist revolution in 1979, had ended up in Nigeria, and
for some reason had decided to make them his beneficiaries.
In fact, the Ghasemis big mistake was not
immediately hanging up the phone. For that mistake, they paid a
huge price – as victims of one of the world’s most widespread
and devastating swindles. They ended up mortgaging their house and
losing $350,000 to the so-called Nigerian Advance Fee Fraud.
Scams, from bogus land sales to pyramid
schemes, are nothing new. Neither is the Nigerian scam (also
called “419” after a Nigerian penal code section.) It has been
around for about 20 years, but its original growth was limited by
the costs and effort of promoting it by phone, letter, or fax. Via
the Internet, however, millions of pitches can be pumped out
effortlessly and at virtually no cost. According to the US
Department of Justice, the number of 419 e-mail solicitations
increased 900 percent from 2000 to 2001. (In Oslo, Norway, alone,
police reportedly received more than 30,000 complaints in a single
year.)
Altogether, thousands of victims, from
Melbourne to Milan, have cumulatively lost an estimated $5-12
billion. Many victims, including large numbers of elderly,
have lost their life savings; some have been driven to suicide by
their debts and their shame.
Scams for Every Taste
Many versions of the con exist, but all bring
the welcome news that unanticipated riches await. The most common
come-on is a request from a purportedly privileged African (often
with a famous last name, and not necessarily a Nigerian) for help
in moving a huge sum into a foreign bank account. I received one
such pitch recently, from someone claiming to be the nephew of the
late Angola guerilla leader Jonas Savimbi. Expressing weariness of
perpetual civil war in his country, he said he faced death threats
from his uncle’s rivals, and was eager to transfer abroad $18.5
million that Uncle Jonas had made in the diamond trade. Would I
help, act as his agent, sign some papers, make my bank account
available as repository? Easy as pie, and, for my meager efforts,
I’d pocket $2.7 million.
Most of us are wary, with good reason, of
something-for-nothing offers and anything with a whiff of
illegality. So it’s tempting to dismiss 419 victims as, at a
minimum, foolish, and, probably, greedy schemers. “The problem is
anybody who gets hooked into that obviously knows the whole thing
is not right and is hoping to get away with it,” says Njall
Hardarson, retired owner of a sheet metal company who runs a
website
http://superhighway.info/IIS/ on 419 scams from
Manchester, England.
Yet many victims turn out to be essentially
law-abiding, reasonably intelligent and generally responsible.
Their ranks include successful, respected businesspeople and
church congregation leaders. One explanation is that though the
scam solicitations seem slightly incredible, they are also based
in reality. For example, it’s a common practice of powerful people
in developing countries in Africa and elsewhere to accrue and
transfer fortunes abroad. “The former head of state of almost any
African country has stolen billions, and moved it out of the
country,” says Hardarson, who began investigating the scam after
being deluged by offers. “People know this, they read about it,
and they say, ‘Why can’t I get a piece of that?’ “
Among the myriad varieties are fraudulent
solicitations of goods in fulfillment of nonexistent Nigerian
government contracts, or offers to share in deliberate
overbillings of invoices. These and others are described at
the US government website
http://travel.state.gov/tips_nigeria.html; actual
solicitation letters are posted at the private Norwegian website
http://www.sikkerhetstjeneste.com/scamletters.htm. Many
appeals push sympathy and urgency buttons, perhaps claiming that
money intended for widows and orphans is being plundered by
corrupt local officials, or warning that if help does not come
soon, the money will be spent on weapons that spread death and
destruction.
Even after victims realize they have been
scammed, most are too embarrassed, or scared, to come forward.
Mrs. Ghasemi is unusual in her decision to go public with the
details of her ordeal, which provide insight into the
sophistication of the plotters, who employ the classic tools of
all manipulators: gradually increasing the stakes and the risks,
and countering objections and doubts with increasingly implausible
and audacious scenarios.
An Expensive Call
The Ghasemi saga began in August, 2000, when
Mrs. Ghasemi, who works as registered nurse in her husband’s
medical office, took the call concerning an unexpected
inheritance. Her initial doubts vanished when an impressive,
official-looking confirmation document emerged from the fax
machine. The name of the deceased party didn’t look familiar, but
it did appear to be Iranian.
The Ghasemis were advised that they would
need a good lawyer in Nigeria to handle the paperwork.They asked
their correspondent for a suggestion, and the next day received a
call from an attorney named Williams. Mr. Williams said he’d need
a standard fee of $7,500, not a small sum but certainly modest
given that the Ghasemis share of the $27 million estate would be
$7 million. As requested, they wired the money, via Western Union,
so that Mr. Williams could register their claim. A few days later
they received word of a snag, confirmed by documents with a
government seal: their deceased friend had failed to pay an
environmental fine. The Ghasemis reasoned that the fine, $40,000,
was a pittance compared to what they were waiting to receive, so
they again went to Western Union. The following Thursday, the
lawyer called from Nigeria to report that the funds would
be available to the Ghasemis by Monday. Paperwork confirming the
impending funds transfer, via a Swiss bank, came through.
But on Monday, the lawyer called with a
further complication. Their deceased friend had apparently failed
to pay taxes of approximately $70,000. Mrs. Ghasemi suggested that
the government simply deduct that amount from the full bequest,
but the lawyer said that Nigerian law did not permit that. When
she refused to send any more money via Western Union, the attorney
gave her instructions to wire it from her bank to an account in
Nigeria.
Again, the Ghasemis were told that the funds
had been released by the Nigerian government; a representative
would soon call from Atlanta with final instructions for
collecting it. When a man called from First Union Bank, he told Dr. Ghasemi that, due to the size of the payment, the couple would
need to fly to Atlanta to pick it up in person. When they arrived
in Atlanta and went directly to First Union, they were mystified
to learn that the bank had no such employee . When they called
their contact on his cell phone, he angrily told them that they
had misunderstood or not followed instructions, and that he was
waiting for them at their hotel.
A half hour later, they were met by two
Nigerians, one resplendent in ceremonial robes, the other in a
designer suit, with an expensive watch, briefcase and cologne. The
duo examined the Ghasemis’ identification and verified their
signatures. Told that they would have to pay a transaction
handling fee of $11,500, the Ghasemis offered to pay by credit
card, but were told that would be unacceptable. And a check would
take several days to clear. The Ghasemis went to First Union Bank,
and were met there by one man, who took the fee, in cash. He said
the money would be in their account by 4pm. It wasn’t, and the
Ghasemis, with mounting frustration, headed for the airport and
home.
En route, their mobile phone rang. It was a
man, angrily telling them that the fault again lay with them --
they had not finished the necessary paperwork. He insisted that
the Ghasemis turn around and check back into their hotel, which
the weary, increasingly dubious couple did. Around dusk, two other
Nigerian men came. They informed the Ghasemis that the government
had finally approved the funds release – in cash. Mrs. Ghasemi
told the man that she couldn’t accept $7 million in currency, that
it sounded clearly illegal and impractical. The men offered to
provide supporting paperwork. The Ghasemis proposed that the men
show them the cash, that they would stay overnight and then
travel with the men in the morning to First Union, where they
would deposit it. The man agreed, and asked them to accompany him
to the parking lot, and to his car.
Speaking of Money “Laundering”
Mrs. Ghasemi at this point had deep
misgivings, but her husband went outside to the car. In a box
where he expected to find greenbacks, he saw instead black, waxy
paper. The men explained that it was diplomatic money, a specially
treated currency which is temporarily blackened for security
reasons. They returned to the hotel room, the man lugging a tin of
chemicals. He proceeded to wash one of the black pieces of paper,
and sure enough, it turned out to be a $100 bill. However, there
were many bills (around 70,000 of them) to be cleaned, the
chemicals themselves expensive – and the Ghasemis would have to
pay a fortune for literally laundering the money: $185,000.
At this, Mrs. Ghasemi got angry. Their
Nigerian attorney had not told them of any such procedure or the
cost attached, and so the couple flew back to Florida without
their money. At 5am the next morning, they called their attorney
in Nigeria. Mr. Williams expressed outrage about the diplomatic
money ploy, and said he would call directly to the Nigerian
President’s office, where he had connections. Two days
later, he called back. In a meeting at the president’s office,
he’d learned that because of budgetary restrictions, the
government did indeed insist that recipients of diplomatic monies
cover the cost of the chemical. The attorney suggested the
Ghasemis keep a receipt, that at year's end the Nigerian government
was going to be receiving aid from the US and Japan, at which time
it would reimburse the chemicals fee. Meanwhile, the Ghasemis kept
receiving phone calls from the man in Atlanta, who warned them
that if they did not want to pay the cost of the chemicals, there
were other recipients waiting for their money who would be given
priority. Finally, the man offered to personally “advance” $35,000
toward the chemicals, but that the Ghasemis would have to come up
with the additional $150,000, which they did.
There were, it seemed, two ways to collect
their money. One was to open something called a Transit Account
(but such an account would have to be opened with an initial
deposit of $350,000) – plus the man wanted her to buy him a Rolex
watch so he could give that to Nigeria’s president in return for
obtaining a plum job. Alternatively, the Ghasemis (and no one else
– he stressed that fact) could go back to Atlanta where a limo
would pick them up from the airport and take them to the cleaning
house so they could witness the money being cleaned. Dr. Ghasemi
insisted, over his wife’s objections, that they had no choice;
otherwise they would lose not only the $7 million, but all the
fees they had already advanced.
Mrs. Ghasemi had had enough. Ignoring the
Nigerians’ warning not to violate the confidentiality of the
transaction, Mrs. Ghasemi called an American friend, a
professional, for advice. That’s when she got the bad news: she
and her husband had been taken for a very long and costly ride.
Mrs. Ghasemi called the Tampa FBI office; it
was a holiday weekend; a duty agent picked up. “Maybe it was
because of my accent, but he told me he couldn’t do anything,” she
recalls. The next day, she called the US embassy in Lagos. The man
who answered the phone seemed to have a faint non-American accent,
but said he was an American named Dr. Mora, and came from
Washington, DC. He listened to her story, took down her contact
information, and excused himself to make another call. After a
delay, he came back with startling news: It wasn’t a scam after
all. He’d confirmed that Dr. Ghasemi was in fact a
beneficiary of monies held by the Nigerian government; he even
faxed a confirmation on an embassy letterhead. And he said he
would go personally to the Central Bank of Nigeria to find out
what the problem was. Mrs. Ghasemi then called her brother-in-law,
from whom they had borrowed $150,000, with the news. But he
insisted she call the State Department. At State, she was again
warned about 419 scams. But when she explained how she’d just been
assured by the US embassy that the monies were real, and after she
confirmed that she had dialed a real number at the embassy, the
State Department man became alarmed. He told her this meant that
the criminal ring perpetrating the fraud actually had a
confederate working inside the embassy. (Mrs. Ghasemi says
that she was not the only person who got bad “advice” from the
embassy, a situation that has apparently been rectified.)
Soon, the Secret Service had assigned agents
to the Ghasemi case. She learned that she and her husband were in
some ways lucky: they were still alive and in one piece. Some
victims who had come to Nigeria to clear things up personally, had
ended up in a bad way. Nigeria can be a dangerous place in general
-- US consular staff travel in armored vehicles. But it’s
especially risky for 419 victims. Once the scam operators conclude
they can’t expect any more money transfers from their targets,
they get down to basics: cash, jewelry, passport. As Annie
McGuire, another “419 vigilante,” who operates the website
www.fraudaid.com, puts it: “They beat people, shoot ‘em, drag
‘em into the jungle, drop ‘em into a river, whatever.”
Fighting Back
Victims and their advocates have been trying
for years, with little success, to shut down the criminal rings
behind 419 scams. But the perpetrators are hard to prosecute. They
purposely work across jurisdictions, with members operating in
various countries, and moving on frequently, often using false or
stolen passports, before the law in any one place can catch up
with them. A scammer may be in Paris one week, London the next.
Their “offices” are typically Internet cafes -- in some of these,
in West Africa, it’s not uncommon to find rows of plotters
simultaneously hard at work mass-emailing 419 pitches. They troll
bulletin boards, buy e-mail lists, and use programs that grab
e-mail addresses off the web. They close the initial e-mailbox
within a few days after a bite, then have their victims contact a
second and then a third mailbox. (In most cases the victims are
not specifically targeted. The scamsters figure that if they¹re
contacting people in developed countries, there¹s a 50/50 chance
they will find someone with savings or access to credit. Even
comparatively poor people have been targeted; they can often find
money by borrowing from relatives or mortgaging their house.)
The conspirators are highly skilled at what
they do, having been educated at so-called “scam schools” where
they learn legal and financial parlance and persuasion skills,
overcoming doubts, handling unexpected crises, and playing a
variety of roles, from lawyer to government official to banker.
They learn how to vary their pitches. And they constantly compare
notes and update their approaches to reflect changing world
conditions.
Although not all of the fraudsters are
Nigerian, the vast majority are. The country itself is a nonpareil
in the crowded ranks of nations where corruption predominates. In
fact, financial fraud is such big business that it is thought to
rank between third and fifth among Nigeria’s income sources. (Even
would-be fraudsters get defrauded. For example, the most pathetic
amateurs end up buying, unawares, “used” address lists of
prospective suckers who have already been approached by others.)
Nigeria is still essentially a tribal
country, with clan members protecting and assisting one another.
Some experts speculate that the popularity of the scams there and
elsewhere in Africa is prompted by a psychology of revenge for the
ravages of colonialism, whose legacy still leaves Africa far
behind the rest of the world in almost every measure of
development. The 419 operators surely see their leaders and
foreign investors making fortunes while they live mired in
poverty. Scammers may thus justify in their minds the
victimization of others, but in the end, it is not just foreigners
who suffer, but the vast majority of ordinary, hardworking,
honest and extremely poor Nigerians, as the 419 scams further
poison the climate for legitimate trade and investment in their
country.
It seems to many that the scams could not
continue in full force without the tacit or explicit approval of
high Nigerian officials. The Nigerian government vigorously denies
involvement, and says that it has taken increasingly aggressive
measures to curb the problem, which it correctly argues has badly
tarnished the country’s image and damaged legitimate trade.
But the tiny number of arrests over the years
tells another story. “Unfortunately, local police and other
officials have not provided assistance to those caught up in
scams,” according to the US State Department’s website, “Tips for
Business Travelers to Nigeria.” Occasional, highly publicized
raids don’t seem to make a dent, especially since most of those
arrested are soon on the streets again. (A man who received wired
monies from the Ghasemis was arrested but released.) Indicative of
the official attitude, Nigerian authorities have on occasion
arrested foreign victims and charged them with being
involved in an illegal scheme. Meanwhile, there’s the question of
how the plotters manage to gain access to reams of
impressively-forged government letterheads and bank seals. They
even manage to gain access to government offices for the victims
who actually can be persuaded to travel to Nigeria. Government
officials may be full participants in the scam or simply renting
their offices for the afternoon.
Mrs. Ghasemi learned the complexity of the
web when she called a Nigerian senator in her efforts to recoup
her money. His office gave her a private number for the office of
the governor of the Central Bank, where a man promised to get to
the bottom of things, and asked her to fax key documents. When she
saw the number of the fax machine, she recognized it as that of
the plotters themselves.
Meanwhile, most other governments have been
slow to pursue the criminals or pressure Nigeria. Hardarson, one
of the first to launch an anti-419 website, notes that the country
continues to be an important income source for First World
companies, notably large oil exploration firms like Shell and
Texaco. “If there was any urgency, something would have been done
a long time ago.” There’s also little sympathy in law enforcement
for “victims” who perhaps should have known better. And those who
do want to take action are hampered in their investigations and
prosecution efforts because of the range of jurisdictions from
which the perpetrators operate and how frequently they relocate.
Lately, however, the situation seems to be
improving. Many agencies, including the US Secret Service,
Scotland Yard, and the Royal Canadian Mounted Police now have
special 419 task forces. First World banks, which for years did
nothing to warn potential victims, now issue standard warnings to
anyone transferring large sums to Nigeria. And the Nigerian
government recently convened a high-level conference on 419 in New
York City, attended by the president of Nigeria himself. At that
meeting, the Ghasemis received the welcome news that the Central
Bank of Nigeria had been able to identify the Nigerian bank where
their money had ended up, and were preparing to refund it in its
entirety.
But the larger battle shows no sign of being
won. The practice has now spread all over West Africa, and, for
that matter, all over the globe. One question of growing urgency
is where the vast profits end up. Experts note that Al Qaeda and
other terror outfits have partially funded their operations
through financial fraud, and note that Nigeria is 50 percent
Muslim. Interestingly, the money Mrs. Ghasemi’s bank wired to the
419 conspirators landed in an account in Lebanon.
Meanwhile, Mrs. Ghasemi still gets calls from
Nigeria, every week. The day before we spoke, she’d just gotten a
call, purportedly from someone in the presidential palace, who
apologized on behalf of the president. The man explained that he
was the director of the government’s anti-fraud operations. Mrs.
Ghasemi checked, and he wasn’t.
Ultimately, it is not that easy to help
victims, many of whom cling to denial. When Mrs. Ghasemi asked one
man who had already lost $250,000 to join in a protest action, he
explained that he didn’t have the $1000 for a plane ticket, then
flew to Nigeria to find out what had happened to his promised
millions. In Lagos, he was promptly relieved of another $500,000.
Even after that, the man’s business partner still does not believe
that they were victims of a scam.
